Superannuation

A research report has found that about 700,000 Australians are paying over the odds to the tune of an average $650 a year by failing to switch to a pension account – highlighting the need for super funds to improve their services.

Financial Services Minister Stephen Jones is finally addressing the retirement industry’s elephant in the room – how super funds continually fail to meet the expectations of members once they are in the pension phase.

More people are permanently leaving the workforce with larger balances and healthy lifestyles. It should be a recipe for a happy and secure retirement, but research shows many are stressed by a retirement income system they simply don’t understand.

Fresh research explains how a lifetime income product, combined with an allocated pension, could mean those on the cusp of retiring will require much smaller superannuation balances than ASFA’s recommended targets.

The not-for-profits flourished when their members were in the accumulation phase. It’s a different story now as increasing numbers want a more personalised service as the decumulation phase beckons. If they can’t get it, SMSFs are a tantalising option.

Industry funds played a deft hand when the bulk of their members were in the accumulation phase. With members now retiring in growing numbers, a new skill set is urgently needed – and the reforms to overhaul the decumulation phase announced by Treasurer Jim Chalmers could help.

It’s been a sharp learning curve, but super funds are learning how to better engage with their members, especially those in retirement. And members are responding positively, with 70 per cent saying they trust their fund to make the right decisions.

SMSFs endured years of being accused of having high fees that cost their members’ balances dearly. Not only was it false, but now APRA fund members have revealed a deep ignorance of just what fees they’re paying and what it’s costing them. Quite clearly, their funds are failing to tell them the full story.

Lost super remains a flaw in the Australian superannuation system. So, for many retirees, it will be worth the effort to make the necessary checks to see there is some money in the regulator’s coffers with their name on it.

For APRA, bigger always seems to be better. But as this state of the nation report into superannuation highlights, size doesn’t count for everything when it comes to delivering member benefits.

Research portrays a $4 trillion superannuation industry struggling to relate to its members, including those nearing or in retirement, with 60 per cent of the more than 2,000 surveyed admitting to finding superannuation confusing.

As a growing number of baby boomers prepare to leave the workforce, funds are enhancing their technology to better inform members about their retirement income options.